Australian economy bounces back from pandemic slump as household spending increases amid elevated business and consumer confidence.
Recently released data from the Australian Bureau of Statistics revealed that the Australian economy grew by 1.8 percent in the first quarter of this year. This exceeded the expectations of economists who had predicted expansion of 1.5 percent after 3.2 percent growth was recorded in the final quarter of last year.
Economists at JC Rothchild General say the better than expected first quarter growth can be attributed to increased spending by households and businesses. Strong consecutive quarterly growth increased Australia’s yearly output by 1.1 percent and placing the economy above where it was when the pandemic and subsequent lockdowns plunged it into the first recession in thirty years.
Australia is one of only six countries around the world to now have an economy that is larger than it was when the pandemic began, with its economic peers being on average 2.7 percent smaller than they were before the global health crisis.
When the number of coronavirus infections started to increase in Australia in March last year, the country entered a lockdown which required restaurants, shops and businesses to close. Jobs were lost and more people were forced to seek welfare assistance.
Since then, Australia has been largely successful in managing its outbreak and has managed to keep the rate of infection relatively low, boosting consumer and business confidence. This, along with generous government backed stimulus schemes, has enabled the economy to bounce back relatively quickly.
Australia’s economy is expected to grow by 4.8 percent this year, before returning to a more normalized rate of growth next year.
Economists at JC Rothchild General say the main risk facing Australia’s economy currently is the slow rollout of vaccines. This could give rise to further outbreaks like the one in the state of Victoria. Last month, the state recorded its first locally transmitted case of Covid-19 in more than three months, prompting authorities to implement a state-wide lockdown. Further lockdowns could interrupt the trajectory of Australia's economic recovery.